It uses current and future sales figures.The system calculates the requirements based on the warehouse stock, receipts, etc. If externally procured then procurement proposals; if internal production then it leads to creation of planned orders, and also dependent requirements are calculated.The best thing about this is that it leads to minimization of inventory, which leads to reduction of costs involved.

Consumption Based Planning

CBP is based on past consumption values and uses the forecast or other statistical procedures to determine future requirements. The procedures in consumption-based planning do not refer to the master production schedule. That is, the net requirements calculation is not triggered either by planned independent requirements or dependent requirement. Instead, it is triggered when stock levels fall below a predefined reorder point or by forecast requirements calculated using past consumption values.

It has no relation with the independent or dependent requirement instead it is triggered when the stock falls below the reorder point or by forecast requirements.

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